Supervalu FY 3Q17 Earnings Call Notes

SUPERVALU’s (SVU) CEO Mark Gross on Q3 2017 Results

Challenges

” we, not unlike others in the food industry, continue to be challenged by an environment that includes competitive openings, deflation and lower levels of SNAP benefits.”

Lots of competition

“What I would lean into in terms of these retail banners is we have an unprecedented amount of new competition among our five banners. We are between two-thirds and 70% of all of our stores have been competitively impacted, which has a significant impact on our IDs. We obviously look at our IDs in a number of ways. One of which is how our stores are competing when they are not being competitively impacted and I can tell you that they are significantly better from a trend perspective”…

“Yes. So, we have historically had in the Minneapolis and Twin Cities market, we have had a host of competitors, some of whom we actually supply, but I think the new – there is a number of new entrants into the Twin Cities. One is a smaller hard discount retailer, but they are opening stores here and then we have another larger competitor from the Midwest that’s recently opened stores and in fact, they opened I think it’s about 5 stores this past calendar year. They are expecting to open more in this current calendar year and probably beyond that and they are very good competitors. So, that would be an example of some competitors coming into the Twin Cities markets. There are additional competitors going into Farm Fresh, hard discount competitors have begun opening stores there. And then there is the usual suspects across all of the banners, in some cases, there is the national competitors like Safeway and Kroger and so on that continue to open stores.”

E-commerce skew higher private label

“It’s a lot of things. I mean, it’s just a little color. They are bigger, they are more frequent and they also skew higher on our private label assortment that it really goes to the loyalty of that shopper. So, it’s a piece that we need to continue to examine and work with.”

Bruce Besanko

Bigger baskets for e-commerce customers

“Yes, our experience so far with these e-commerce – our e-commerce customers is that they have – they buy more, they have bigger baskets and they shop more often. So, it’s a nice story here and we need to – we are working to roll this thing out rapidly. I think our intent is to have an e-commerce solution in each of our five banners by the end of this year and then the continued investment into our new fiscal year.